Which of the following will decrease the short-run aggregate supply of the United States?
A)a decrease in wage rates
B)a decrease in interest rates
C)a drought that destroys the crops in the California vegetable growing region
D)a reduction in resource prices

Question

Quizplus · Accepted Answer

A drought that destroys the crops in the California vegetable growing region will decrease the short-run aggregate supply of the United States as it will lead to a decrease in the production of vegetables and an increase in their prices. This, in turn, will increase the overall price level and reduce the output level in the economy. Choices A and D will increase the short-run aggregate supply, and choice B will have no effect on it.

Which of the Following Will Decrease the Short-Run Aggregate Supply